Leading the way in the Japanese market recently was Sanwa Bank's long-awaited 50 billion ($420 million) residential mortgage-backed securitization, the first of its kind from Japan. Domestic investors bought 55 percent of the issue, followed by U.K. investors who bought 40 percent, and U.S. investors who bought the rest.

"Investor reaction was extraordinarily positive, and the issue was more than three times oversubscribed," commented a banker at Sanwa International in London, which arranged the transaction along with Bear Stearns.

Bankers reportedly had a difficult time winning over Japanese investors in the long run-up to the deal's launch, but their efforts paid off. "We were surprised by the level of demand shown out of Japan. But since Japan is clearly a market that has tremendous potential for growth, developing a core investor base both at home and offshore was very important," added the Sanwa official.

An SPC called SHL 1991-1 Corporation Ltd. issued five classes of notes. Class A1, worth 22 billion, was priced at 40 basis points over the three-month LIBOR; class A2, worth 15 billion, was priced at 70 basis points over the three-month LIBOR; and the remaining fixed-rate notes were priced at coupons from 2.09% to 3.36%. Moody's Investors Service and Fitch IBCA rated the top four classes triple-A.

Following Sanwa's launch in the Euromarket was a residential home improvement loan-backed securitization originated by consumer credit company Aplus Co., arranged by Credit Lyonnais. The issue from OM Funding Corp. comprised E138 million of notes priced at 50 basis points over Euribor and rated triple-A by Moody's and Standard & Poor's. It was Aplus's first home loan securitization, although at press time the company was preparing to launch its third auto loan-backed securitization, arranged by Sanwa Bank.

Domestic ABS issuance also picked up with the launch of a second shopping loan securitization from Orient Corporation, a credit sales company that is one of Japan's most active ABS issuers. The 50 billion transaction issued by Orico Shop II comprised 5 classes of notes with coupons ranging from .69 to 1.24%. Daiwa SB Capital Markets arranged the issue, which was rated triple-A by both Moody's and Standard & Poor's.

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